Decentralizing Digital Assets with Blockchain Technology

P2P and The Desperate Need for Removing Middlemen

The Problems

Consumers Are Losing Trust in 3rd Parties and It Shows

The digital media landscape today is stuck using dated infrastructure and technology for selling and distributing content. Publishers and creators turn to aggregators, app stores, and content portals in order to license, distribute, and surface their content to consumers. As a result, the publishers and consumers both incur the additional cost for these middlemen who provide the infrastructure required by these services. This system artificially inflates prices and eats into the margins of content owners, publishers, and developers, resulting in inefficiencies and lost value through the entire pipeline. It also leads to monopolistic practices. See Apple’s current Anti Trust Litigation in the US Court of Appeals for the 9th Circuit, In Re: Apple iPhone Antitrust Litigation. Trusting 3rd parties with licensed content distribution is slower, less transparent, more expensive, anti-consumer, and anti-publisher, and it’s a similar paradigm to how financial institutions’ flaws are highlighted in the original Bitcoin whitepaper, “Bitcoin: A Peer-to-Peer Electronic Cash System”:

Commerce on the Internet has come to rely almost exclusively on … trusted third parties to process electronic payments. — Satoshi Nakamoto

The Attention Economy is Broken

The price of accessing content has continued to rise as file sizes and costs of delivering that content go up. 4K, VR, and AAA games are all contributors to this trend. Uncompressed 4K video is over 700 GB per hour of content, and Netflix just raised it’s prices to try to accommodate supporting 4K. Consumers are not only paying more for transactional content and subscriptions, but they have to deal with a complex and abusive system of advertising from the 3rd Parties to view free content. Facebook’s revenue in 2017 was $40.65 billion, and Google’s was $109.65 billion. This is a partial representation of how much advertisers are willing to pay for people’s attention, and how those companies offset their operational costs of delivering huge amounts of content to consumers. This system introduces tools to skip or remove advertising like ad blockers (Check out PageFair’s report), which in turn creates ad-blocker-blockers and further smarter ad blockers. Ultimately, consumers move to more expensive subscription services to avoid ads and where content owners try to recapture lost revenue. This leads to consumers needing many cumbersome subscriptions for different publishers and aggregators. It’s a vicious cycle, and consumers lose.

Privacy is Being Stripped, Data Stolen

Society’s privacy is being stripped away more and more every day. Not only do Facebook and Google know everything about consumers, governments have also been invading our privacy for a very long time. You have to jump through tremendous hoops to remain anonymous while operating in today’s world. Privacy is a basic human right, and just because privacy is desired, it doesn’t mean you are up to something devious, and it certainly doesn’t mean that there is any intention to steal content from a publisher by turning on an ad blocker. It just means that advertising is so abusive now, that consumers not only want to protect their privacy, but also the performance of their devices and their data plans. Consumers giving over all their information also means that centralized databases of information are available to inevitably get hacked, as evidenced by the numerous massive data breaches, like Equifax and others.

P2P Networks Have Flaws

Implementations of P2P file sharing like BitTorrent, while more efficient at delivering content than centralized content delivery networks, are rife with abuse, piracy, hacking, and black markets. “Game of Thrones” Season 7 Episode 1 was pirated 90 million times via torrent, for example. The legal issues are numerous, and malware infection rates on torrented applications can be as high as 43%. There is no guarantee that the individual uploading content has the right to do so, and no way to verify that the content seeded is delivered to a consumer as the content creator intended. There is also no incentive for a consumer to store and share the content after it is downloaded, so users are unlikely to remain seeds in the system of delivery (i.e. leeching). Peers leech content for themselves, then do not continue to participate in seeding that content out to other peers.

Net Neutrality is Under Attack

ISPs (and the FCC they paid off) are now on the offensive to make it harder for consumers to access the content they want, with the ultimate outcome being that consumers will need to pay more for internet fast lanes. Not only do the 3rd party services themselves have to spend more for hosting and delivering higher quality content (and therefore they must charge more to consumers), but consumers will now have to pay more to the ISPs to get fast access to that content.

The Solution

Blockchain to the Rescue

To address the above issues (and more), solutions need to be built leveraging blockchain technology, P2P file transfers, and utility tokens to remove all the middlemen. These systems would operate as intended in a fully decentralized and trust-less fashion. They should handle payments for digital content with encrypted P2P file transfers, and have a DRM system built in for content owners to publish into. These systems would work for every type of digital asset. Books, movies, games, VR, AR, models, in-game purchases, research papers, music, archives, website bundles, and more. All on the blockchain.

Rewards for Consumers

In the current model of P2P file sharing, there is no incentive, and actually an active disincentive to participate in the network. The bulk of the content being shared is virus ridden, copyright infringed, or hacked up content. ISPs track this and actively go after people doing it. In addition, there are no rewards given to the seeds for leveraging their storage space and bandwidth to share content with other users. Use computer resources to no longer have to have your attention monetized. The attention economy is toxic, and your time is too valuable to watch ads. You also have resources in your own home or on your devices today that can be used to support the ecosystem of content, rendering advertising and/or paying for content irrelevant.

Direct Payments to Content Creators

As consumers are gaining rewards for hosting and delivering content, they can use those rewards to pay creators directly. In turn, those creators can use those tokens to publish content back into the system. They can also use tokens for things like promoting content, so if a consumer chooses to view that content, they can receive a reward for it. This way advertisers and creators wanting to promote content to a higher visibility can still pay to do that. Consumers can just choose now what they want to trade their time for. Higher bounties pushed in by the content owners means a greater chance of a consumer seeing their content. This creates a true, two sided use for the tokens.

Stopping Piracy

P2P file sharing and DRM components should be designed using smart contracts to eliminate unlicensed or illegitimate content making its way into the blockchain. This can be done by using a system of publishing cost, staking, and bounties. This means that any legitimate content creator wanting to push content into the blockchain will need to stake tokens to do so. If they push illegal content into the blockchain, and they are caught by a large enough consensus of people, they lose their entire stake and it’s rewarded to the consumers that identified it. If the consumers intentionally vote wrong on that content to try and take someone else’s stake (i.e. if the content isn’t illegal), they are at risk of losing their stake instead. There also needs to be additional layer of trust, similar to Instagram and Twitter’s verified users. Smart contracts are a powerful construct, first introduced by Nick Szabo in the paper Formalizing and Securing Relationships on Public Networks, then popularized by Ethereum.

Keeping the Net Neutral

ISPs in this decentralized system can’t throttle content like they can from Netflix or YouTube because it isn’t coming from them. It’s coming from a vast network of users in the system. This makes it easier to maintain a neutral Internet, and even makes it possible to run blockchain-based applications in a mesh network like New York Mesh. Verizon is blatantly throttling video down to lower quality, and you can’t do anything about it. A decentralized system, potentially coupled with a mesh network, is a more attractive system for consumption given these dynamics.

This is Just the Beginning

Blockchain technology is as big as the Internet itself. It is a new protocol, or set of protocols, that enable vast efficiencies to be gained while making the digital world more secure. It gives power back to the people, in a time where we can no longer trust central authorities to act in the consumer’s best interest. This technology will touch everything. Banking, Entertainment, Enterprise, Healthcare, Real Estate, Cloud Computing, Identity, Voting, and more.